In a staggering U-turn, the Prime Minister’s official spokesman said the “early reaction” from the public made it clear that Brits wanted to keep our coppers.
The Government will nevertheless continue with a controversial “call for evidence” on the future of cash – released by Chancellor Philip Hammond after Tuesday’s Spring Statement.
The paper resurrected proposals to abolish “obsolete” copper change as well as the £50 note.
But No.10 indicated that 1p and 2p pieces were here to stay.
“One thing HM Treasury were seeking views on was whether the current denominational mix of coins meets the public’s needs, and from the early reaction it looks as if it does.”
Ex-Chancellor George Osborne first considered axing the penny in 2015 – only to be blocked at the last minute by then-PM David Cameron.
Lib Dem leader Vince Cable last night said: “The penny dropped fairly quickly after the instant criticism.
“This is good news for hard up families and pensioners who have to watch the pennies, as well as seaside penny arcades and charities.”
John White, head of BACTA, the trade association for UK amusement arcades, said: “The news that government will not axe 1p and 2p coins is a victory for common sense. Coastal arcades across the country will now breathe a collective sigh of relief.
“Aside from the impact on inflation, the removal of our smallest denominations would have a huge impact on British heritage and the seaside arcades that stimulate local economies and tourism.
“2p pushers are the machines that many people remember fondly from their childhood and can be found across hundreds of arcades across the coast.
“Doing away with the 2p coin would have meant the extinction of an active British pastime, the arcades that house these machines and therefore the resorts who depend upon them.
“We’re pleased that Government has seen sense, thousands of families visiting our members venues now won’t be deprived the experience, and critically we won’t be losing a part of our cultural identity.”
Around six in 10 1p and 2p coins are believed to be used just once before they are put into savings jars and piggy banks – with some 8 per cent thrown away.
The Royal Mint has to produce millions each year to replace them – at huge cost. The Treasury’s Cash and Digital Payments in the New Economy consultation questioned whether the current mix of eight coins and four banknotes meets modern needs, and if not “how should it change?”
Government insiders stressed the real target was always the £50 note – given fears they are mainly used in criminal activities.